The Index of Banking Activity (IBA) composite index fell slightly in June to 57.7, down from 59.2 in May. Respondents to the monthly IBA Survey, administered by American Banker in partnership with VantageScore Solutions, cited the impact of a mid-June spike in long-term interest rates, which increased more than 50 basis points after Federal Reserve Chairman Ben Bernanke suggested the Fed could end quantitative easing later this year.
With this month’s reading, the Index of Banking Activity begins its second year as a measure of the overall business strength of U.S. financial institutions. The Composite Index reading has seen a net increase in its first 12 months, up 6 percent year over year from its first reading of 54.4 in June 2012.
Source: American Banker and VantageScore Solutions, LLC
Compiled from surveys of executives at hundreds of financial institutions across the United States, the index is an industry bellwether that tracks 16 distinct business indicators, such as volume of deposits, loan applications, and loan delinquencies, and how they change month over month. Measurements of each of these components are combined into a single Composite Index, in which readings above 50 indicate business expansion, and those below 50 signify contraction. Find more information about the Index and its component measurements at AmericanBanker.com.